The million dollar question Indian marketers are forever wrestling with is this: in a land of over 8,000 towns and 6,00,000 villages, where is demand the strongest? This has implications for marketers as they zero-in on key markets to focus their energies on in 2012 and beyond. While Middle India (1-10 lakh towns) leads the pack in same-store sales for the last three-year period, smaller towns with a population of 1 lakh and below have surged far ahead of the rest in 2011.

When we examined the performance in 2011 (Q4 over Q1), we found that the smaller Indian towns with a population of less than 1 lakh people led an impressive growth story (19% in value terms versus 15% in rural India and 12 percent in the metros) even though distribution grew marginally faster in rural (4% in villages compared to 3% in these smaller towns). Growth in sales per point of distribution in 2011 for towns with a population of 1 lakh and below stood at 16 percent versus 11 percent for the metros. Demand pull today is undoubtedly strongest in the smallest of Indian towns.